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Multiple Guarantors

  • 06-02-2013 4:43pm
    #1
    Uriel.
    Registered Users, Registered Users 2 Posts: 8,062 ✭✭✭


    Does anyone know how the law handles a situation in respect to multiple guarantors to a loan that has defaulted.

    for example

    Company takes a loan of €120k
    4 individuals a,b,c and d agree to go guarantor for €100k of the loan
    Company defaults.

    Does the law divide tend to divide the amount owing out between the 4 individuals e.g. €25k each.

    What happens if person A goes bankrupt or has disappeared.

    Does the law force the other 3 to pick up the tab? e.g. €33.33k each. or is each individual only responsible for their "share"

    What would happen if a,b and c were bankrupt. Would D have to pay entire amount or have a judgment against them in the entire amount?

    Thanks for any assistance.


Comments

  • #2
    ResearchWill
    Closed Accounts Posts: 4,111 ✭✭✭ResearchWill


    Loan guarantees are most usually Jointly and Severally, which means each person is liable for the full amount of the loan.

    But it would of course be necessary to carefully read the document to discover the exact intention.


  • #3
    Lbeard
    Banned (with Prison Access) Posts: 311 ✭✭Lbeard


    Dr. James Reilly, is it yourself.


  • #4
    Uriel.
    Registered Users, Registered Users 2 Posts: 8,062 ✭✭✭Uriel.


    ResearchWill wrote: »
    Loan guarantees are most usually Jointly and Severally, which means each person is liable for the full amount of the loan.

    But it would of course be necessary to carefully read the document to discover the exact intention.
    How would that work if say all 4 had not the means to repay. Would it be a case of a judgement for the full amount being made against each of the individuals separately?? It would seem inequitable if say two individuals had absolutely no assets while the other two had family homes in ownership with their partner. The first two would get away without having to cough up but the lender could get a judgement mortgage of €300k against the property of each of the other two.?


  • #5
    Uriel.
    Registered Users, Registered Users 2 Posts: 8,062 ✭✭✭Uriel.


    Lbeard wrote: »
    Dr. James Reilly, is it yourself.
    Lol nope it's not.


  • #6
    ResearchWill
    Closed Accounts Posts: 4,111 ✭✭✭ResearchWill


    Uriel. wrote: »
    How would that work if say all 4 had not the means to repay. Would it be a case of a judgement for the full amount being made against each of the individuals separately?? It would seem inequitable if say two individuals had absolutely no assets while the other two had family homes in ownership with their partner. The first two would get away without having to cough up but the lender could get a judgement mortgage of €300k against the property of each of the other two.?

    Then they should not have signed PG's. no one ever said business was equitable, or fair. If you sign a guarantee, without getting good sound legal advice then watch out.

    There is nothing stopping the guy who paid out trying to collect from the others but if they have nothing, then the guy with the money is screwed.

    Moral of the story don't sign PG's.


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  • #7
    Uriel.
    Registered Users, Registered Users 2 Posts: 8,062 ✭✭✭Uriel.


    ResearchWill wrote: »

    Then they should not have signed PG's. no one ever said business was equitable, or fair. If you sign a guarantee, without getting good sound legal advice then watch out.

    There is nothing stopping the guy who paid out trying to collect from the others but if they have nothing, then the guy with the money is screwed.

    Moral of the story don't sign PG's.
    Well i am talking in terms of inequality in the law rather than in business.

    But it is interesting to note that the entire amount could potentially fall to one individual despite the fact that four people signed guarantees


  • #8
    ResearchWill
    Closed Accounts Posts: 4,111 ✭✭✭ResearchWill


    Uriel. wrote: »
    Well i am talking in terms of inequality in the law rather than in business.

    But it is interesting to note that the entire amount could potentially fall to one individual despite the fact that four people signed guarantees

    There is no inequality in the law any one of the people could have refused to sign, or could have insisted on limited guarantees, if say 4 people are asked to sign a guarantee, J&S for €100k, they can ask that they each be limited to €25k, it can not be inequality to have the law insist that you are responsible for what you sign.


  • #9
    dermot_sheehan
    Closed Accounts Posts: 2,062 ✭✭✭dermot_sheehan


    Judgement for the full amount can be entered against all the guarantors (assuming its joint and several), the guarantors can seek judgement for a contribution amongst against each other if they've overpaid their share.


  • #10
    Uriel.
    Registered Users, Registered Users 2 Posts: 8,062 ✭✭✭Uriel.


    dermot_sheehan wrote: »
    Judgement for the full amount can be entered against all the guarantors (assuming its joint and several), the guarantors can seek judgement for a contribution amongst against each other if they've overpaid their share.

    If two of the guarantors, actually let's say one for simplicity had a family home and none of the rest had assets, banks presumably would seek an order at some point for sale of the home to recoupe the €100k. At what point can that guarantor seek a judgment for overpayment? Or can they? Presumably if that judgment was possible they would be seeking the judgment against the three other guarantors, as the banks have taken their money and are out of the equation. If the judgment was obtained by the fourth guarantor against the other three it wouldn't be worth a damn as the others can't come up with the money


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